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Rents rise twice as fast as wages

Average rents rose 1.6pc in November, driven by ‘acute’ property shortages

Rents are rising at twice the annual rate of earnings, as tenants jostle for   limited accommodation – especially around urban centres offering better   employment prospects.

Average rents across England and Wales reached £753 a month in November, up   1.6pc from November 2012.

Wages have risen by just 0.8pc – average regular monthly pay before tax stands   at £1,941.

The news is good for landlords. Research by LSL Property Services, which owns   the UK’s largest network of lettings agents, shows the average landlord has   seen total annual returns reach 8.9pc thanks to rising house prices. This   represents an average return of £14,592, with rental income of £8,243 and   capital gain of £6,349.

It said if rental property prices continue to rise at the same pace as over   the last three months, the average buy-to-let investor in England and Wales   could expect to make a total annual return of 10.5pc over the next 12   months, equivalent to £17,294 per property.

With house prices expected to soar over the coming years, experts are   predicting landlords will look to expand their portfolios in 2014.

David Whittaker, of specialist landlord broker Mortgages for Business,   predicted a 25pc increase in business next year. “The intention of landlords   to expand further demonstrates that demand for rental property shows little   sign of waning,” he said. A survey of 300 clients found 57pc wanted to buy   further property in 2014. Of those already owning more than 10 properties   the proportion was higher, at 66pc.